GM’s Product Development Approach

An excerpt from the prepared comments by GM Chairman and CEO Dan Akerson for 2012 GM Stockholders Meeting:

“But the most profound changes are occurring in product development. We’ve looked at our future product plans and studied the competition, and it’s clear that we can satisfy more customers with far fewer vehicle architectures.

“To that end, we’re targeting a roughly 50 percent reduction in architectures by 2018, and I believe we will find additional efficiencies along the way.

“I won’t put a dollar figure the savings, but they will be very large. We’ll be paying for fewer prototypes. We’ll get better pricing on material and commodities, and we can share tooling designs around the world. In addition, our quality and warranty costs should improve further, we will be able to get to market faster and the list goes on.

“We’re already seeing modest savings start to flow and more will accrue and compound steadily over time. As a customer, you will see the benefit in better-engineered cars and trucks, and more choice. And as a stockholder, you’ll see the benefit in higher margins and stronger cash flow.”

Which, of course, is all good. Maybe.

(Photo by Steve Fecht for General Motors)

Yes, the reduction in platforms can be a good thing. It allows greater focus on those that you have. More engineering resources to be deployed. Potentially better quality to be realized.

But here is where the “maybe” kicks in: the slippery slope of brand engineering, as in “Gee, we have a Chevy version of that, so let’s have a Buick one, too. We can save a whole lot if we just. . . . “

Follow that line of thinking and pretty soon you end up with Mercury. (Remember Mercury?)

When Bob Lutz was at GM, he was rather, ah, vocal vis-à-vis the separation of brands, of creating and maintaining distinct identities. Here’s hoping that the people at GM keep that going, because you can save all the money in the world by reducing architectures and getting material discounts by getting materials and components in bulk and so on, but if fewer people buy the resulting products, there will be lower margins and weaker cash dribbles.